GREEN HYDROGEN: 6 FACTS

South Africa has the potential to become a major exporter of green hydrogen. Kirsten Kelly interviews Thomas Roos, senior research engineer at the CSIR, about the green hydrogen industry.

What is green hydrogen?

TR Green hydrogen is created by the electrolysis of water using renewable electricity. The electricity must be green (wind, solar, biomass or geothermal).

Green hydrogen is new, but South Africa has been making hydrogen for decades. Sasol has been using both coal and natural gas while PetroSA has been using solely natural gas to make hydrocarbons.

What are the drivers for green hydrogen?

The primary driver is climate change.

Achieving the Paris Agreement target of keeping the global temperature rise to below 1.5°C requires a fundamental transformation of the global energy mix. Green hydrogen can play a key role in this transformation as a sustainable, carbon-neutral fuel. Furthermore, green hydrogen is expected to play a key role in achieving the Green Deal objective of making the EU climate-neutral – with net-zero greenhouse gas emissions – by 2050. In order to protect their industries, the EU have implemented the Carbon Border

The cost of desalination of saline or non-potable water makes up a near-negligible fraction (1%) of the hydrogen production cost

Adjustment Mechanism Regulation that requires importers of certain carbon-intensive goods to pay a levy on their imports. This motivates these importers to decarbonise their production processes and green hydrogen can assist in certain cases.

The secondary driver is the drop in the prices of renewable energy. Over the past few years, the price of photovoltaics and wind power has decreased dramatically.

The third driver is the growing market for green hydrogen imports. Japan and Germany are two such countries that plan to import green hydrogen in bulk:

Japan plans to import hydrogen in bulk from 2030, at a target cost delivered to Japan of US$3/kg (R58/kg), but only requires the imported hydrogen to be carbon-free from 2040 onwards. Japan is a major net energy importing country, ranked in the top four global importers of the three main fossil fuels: coal, natural gas and oil. Having signed the Kyoto Protocol on 28 April 1998, Japan has climate obligations. The Fukushima nuclear disaster in 2011 significantly reduced public acceptance of nuclear power, constraining the decarbonisation options available.

As an industrial powerhouse, Germany is dependent on large volumes of energy,

Thomas Roos, senior research engineer, CSIR

and their natural gas supply has been compromised by the Russia-Ukraine war. Germany is expected to need an annual volume of hydrogen of between 90-110 TWh (2.7-3.3 Mt) by 2030. However, domestic generation will be insufficient to cover all the expected new green hydrogen demand, so most of the hydrogen needed will have to be imported. Germany aims to systematically develop green hydrogen production sites in partner countries within the GIZ that offer great renewable energy potential. South Africa meets both of these requirements.

With our renewable energy resources (sunshine and wind), we have the ability to export green hydrogen at a better rate than Europe. A recent report by PwC estimated that South Africa could potentially export 7 Mt of green hydrogen a year, with a local market of 2 Mt.

What industries are best positioned to use green hydrogen?

It is important to note the best and most economic and efficient decarbonisation solution is to use renewable energy directly wherever possible. Creating hydrogen has a conversion loss, where approximately 50% of electrical energy translates into chemical energy and hydrogen and the electrolyser to make hydrogen is capital intensive.

However, green hydrogen is ideal for two sectors: long-distance heavy transport (maritime shipping, commercial aviation, rail and long-distance heavy trucking) as well as certain manufacturing industries (steel, cement, plastics, ammonia).

The mining industry (platinum and gold) is interested in using green hydrogen to power trucks and specialised equipment, as well as the use of a dual-fuel engine that can run on both diesel and hydrogen.

How else can South Africa benefit from green hydrogen?

Extra water and extra renewable energy. The German National Hydrogen Strategy states that the generation of hydrogen in partner countries for export to Germany must not result in a decrease in renewable energy available in that country. The high capital costs of an electrolyser and intermittent supply of renewable energy (wind and sun) can drive up the price of green hydrogen. Therefore, it is important to oversize renewables to make maximum use of the electrolyser. This would provide an opportunity at times to sell the excess electricity that is not needed to make green hydrogen back into the grid, providing a viable solution as the South Africa battles with power generation and electricity availability.

If South Africa exported 10% of the world’s hydrogen requirements, our 40 GW grid would need to be upgraded to a 600 GW grid. Provinces and metros could use this opportunity to build transmission lines and substations, and attract further investment. The more renewable energy that is added to the grid, the cheaper the electricity.

Furthermore, for hydrogen to qualify as sustainable, the water source must be sustainable. This means that using water for fuel production must not negatively affect communities, agriculture or the environment. This is a particular concern under the German National Hydrogen Strategy, which states “the sustainable supply of water in arid regions of these countries must not be impaired by the production of hydrogen”.

Fortunately, the cost of desalination of saline or non-potable water makes up a near-negligible fraction (1%) of the hydrogen production cost. This is because it costs 50 KWh of energy to make 1 KWh of hydrogen, but it only takes 3 KWh to make 1 000 kg of desalinated water. Desalination is an expensive water source for most industries – except green hydrogen.

This means that it is entirely possible to make a policy where green hydrogen producers oversize their desalination plants as part of their licence to operate. A desalination plant could then sell water to a water utility only at the electricity price.

How would green hydrogen be exported?

The Port of Saldanha Bay and Port of Coega Two are considered attractive for the manufacture of hydrogen for export.

The Port of Saldanha Bay is attractive for shipments to Europe, as it is South Africa’s deepest port and is on the western seaboard. It has a 365 m long tanker berth for liquid bulk cargo with a permitted draught of

21.25 m alongside. It is also geographically close to good combined solar and wind resources. It is within the Berg catchment that is severely affected by water stress.

The Port of Coega makes most sense for shipments to Japan and South Korea, as it is an underutilised deep-water port designed to accommodate vessels of 14 m draught on the eastern seaboard. While it is close to good wind resources, the local solar resources are not strong; however, it may be connected to good solar regions via the national electricity grid.

What are some of the green hydrogen developments in South Africa?

The German KfW Development Bank has provided roughly R400 million in grant funding to support the development of South Africa’s green hydrogen economy and bolster its transition to renewable energy. The CSIR and Meridian Economics are appointed by KfW to help it identify and evaluate highpotential projects for implementation.

We have identified six projects to be implemented by the Industrial Development Corporation (IDC) and KfW.

Government has gazetted nine potential hydrogen projects as Strategic Integrated Projects (SIPs). This means that the projects will follow an expedited path to delivery with stipulated and shorter timeframes for all necessary approvals.

Sasol and the IDC have concluded a memorandum of cooperation to jointly develop and shape an enabling environment to advance South Africa’s green hydrogen economy. The South African Hydrogen Society Roadmap has also been published.

The Western Cape and Northern Cape provinces have signed a memorandum of understanding to develop a green hydrogen corridor and hub. While the Northern Cape has the wind and sun resources, the Western Cape is home to the key Port of Saldanha Bay.